Dairy, payment limit converge in ag committees

The last of August and the first two weeks of September might well be designated National Take a Dairy Farmer to Lunch Month for cotton producers and other growers concerned about payment limits.

The House and Senate Agriculture and other authorizing committees face a Sept. 16 deadline for submitting their proposals for meeting Congress' fiscal 2006 spending reduction targets. For the Agriculture Committees that means cutting $3 billion over the next five years.

That task is not as daunting as it might seem, according to Hunter Moorhead, staff member on the Senate Appropriations Committee, who spoke at a joint meeting of the American Cotton Producers and The Cotton Foundation in New Orleans.

“Saving $3 billion over five years is not that big a problem,” said Moorhead. “This year the agriculture appropriations bill removed $1.4 billion from the agriculture budget, and I would be willing to bet most of you never realized it.”

The rub — you knew this was coming — is that while the Agriculture Committees are considering ways to cut that $3 billion dairy farmers are seeking a two-year extension for the MILC program which provides commodity payments to dairy producers.

First, some background: When President Bush was campaigning for re-election last year, he promised dairy farmers he would ask Congress to extend the MILC program, which was scheduled to expire this year, for two more years.

When the president submitted his fiscal 2006 budget last February, it contained proposals for cutting $5.7 billion in spending for agriculture by 1) tightening payment limits and 2) reducing direct payments for all farmers by 5 percent. But he also included additional spending of $1.2 billion for the dairy program in fiscal 2006 and 2007.

“Instead of the adopting the president's budget numbers, Sen. Saxby Chambliss, the chairman of the Senate Agriculture Committee, persuaded the budget committees to reduce the savings target for agriculture to $3 billion and to allow the agriculture committees to decide how to provide the savings,” said Moorhead.

“The Senate also passed a Sense of the Senate resolution that said you might want to look at payment limits as a possible source of budget savings.”

Further complicated

The situation is further complicated by the fact that the Senate Agriculture Committee has several new members from dairy states, Moorhead told the cotton producers and industry support leaders.

In a perfect world, he said, Senate Agriculture Committee members would come to their meeting room after they return from their August recess in early September, decide where to make the $3 billion in savings, vote and walk out. But it probably won't be that simple.

“Sen. Chambliss knows that extending dairy payments and payment limits will be a major part of the discussion,” he said. “But the most difficult part may be reducing ag spending overall by $3 billion, while, at the same time, providing another $1.2 billion to extend the MILC program.”

Moorhead cautioned cotton industry leaders that they must be prepared for the possibility of close votes on the dairy program and payment limits.

Despite the potential for some tense moments in early September, Moorhead says he believes the payment limits rules in the current farm bill will remain unchanged. “I think we have enough members on our side of the House and Senate ag committees to make sure that doesn't happen.”

One positive in the equation is that Sen. Chambliss' arrangement with the budget committees requires the agriculture committees to only cut $173 million from the fiscal 2006 budget with larger contributions toward the $3 billion to come later.

There's also the possibility that the authorizing committees won't meet the Sept. 16 deadline, and it could be November before Congress passes the fiscal 2006 budget reconciliation bill, Moorhead said.

Little fight interest

Although Agriculture Secretary Mike Johanns has already held four Farm Bill Forums to get input from farmers about the next farm bill, Moorhead said few in Congress appear to be eager to get into the fray. (The Farm Security and Rural Investment Act of 2002 or current farm bill expires in 2007.)

“The only member who's mentioned the new farm bill is Rep. Bob Goodlatte, R-Va., the chairman of the House Agriculture Committee,” said Moorhead. “He has talked about starting the hearing process, but most people don't think that will happen until next year.

“September is shaping up to be a very busy month and the start of a busy fall,” he noted. “The administration would like to confirm John Roberts before the next term of the Supreme Court begins on Oct. 1. And Congress must complete the remaining appropriations bills or agree to a continuing resolution by the end of the fiscal year on Sept. 30.

The Office of Management and Budget recently lowered its estimate of the federal budget deficit by $94 billion to $333 billion, a development that could bode well for farm organizations.

“A number of people are saying that if you could just extend this farm bill a couple of years they wouldn't be upset,” says Moorhead. “Hopefully, we can all work together to continue a policy that adequately supports production agriculture and protects out natural resources.”